Cassidy: It's time to add Apple to the Dow mix

So, are you pumped about the Dow closing above the 13,000 mark Tuesday for the first time since the economy collapsed in a heap?

Yeah, me neither. But hey, it's a milestone and there is nothing we like better in Silicon Valley than a milestone, particularly when it could be a sign that things are looking up.

OK, there is one thing we like better: Apple (AAPL). And that's what's missing from this whole Dow watch. Apple, the most valuable, exciting, talked-about, written-about, dreamed-about company in the world has never been a part of the Dow. But had Apple been in the mix, we could have dispensed with this crossing the 13,000 barrier months ago, given Apple's stock price.

As it is, the Dow is, well, boring.

Apple is not among the 30 companies that the three-member committee of Dow Jones representatives has ordained as the enterprises that provide a "measure of the entire U.S. market." But you know what is? Alcoa.

I mean, come on. You're going to measure the entire U.S. market without measuring Apple? Apple is the entire U.S. market. The company is one of the most successful companies on the planet; and it's sitting on a pile of cash equal to the GNP of Qatar. But it's nowhere to be seen in the Dow Jones industrial average, which has bounced all the way back from 6,500 territory in early 2009. And chances are it never will be. The high-flying stock is just too much of an outlier.

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But had the Dow pickers included Apple in its average, the Dow would have long ago blown past its record high of 14,164. Greylock Partners' executive in residence Adam Nash ran the numbers recently ("I'm a little weird with spreadsheets," he says.) and pointed out the delicious possibility in a post on his personal blog.

"How would the political discourse be different if we were talking about an all-time high for the Dow?" Nash says by phone. "These are just numbers, but when millions of people hear it talked about as 'the market,' it actually changes how people feel about the country."

So, the Dow committee has a patriotic duty to add Apple to its index. But it also owes it to Silicon Valley. Look, Apple is the coolest thing the valley has going. It is the valley's hip factor.

The Dow, on the other hand, is in need of hip replacement. It is everything the valley is not. It holds tight to tradition. It moves slowly. It favors industrial giants to technological gazelles.

What companies do the Dow gods choose from the valley? Cisco Systems (CSCO), Hewlett-Packard (HPQ), Intel (INTC). No offense, but those stalwarts sound more like the Dowdy Jones average. Great companies, but dude, they're either ancient or they exude all the sexiness of your weird uncle picking his teeth at the table.

We need a DJIA rep that is all white ear buds, Feist and Siri (which can tell you youngsters that Feist is the singer who starred in Apple's iPod Nano commercials). And the Dow itself could use a shot of 21st century. I mean, good move replacing Standard Rope & Twine back in 1899, but look who's still listed: DuPont, Caterpillar, GE and Kraft. Kraft? How about dumping the mac and cheese and replacing it with just the Mac?

Yes, the Dow folks have their reasons. For one thing, they say, the Dow, as it is, accurately reflects the general ups and downs of the market.

"A lot of people say, 'Gee, if Apple was in, the Dow would be a lot higher.' But you see, that's not our goal, to push the Dow higher and higher and higher," says John Prestbo, chairman of the Dow Jones Index Oversight Committee. "Our goal is to show what the market is doing."

For another thing, the Dow pickers are not down with fast-twitch change. The last move they made was in 2009, when Cisco took GM's spot and Travelers replaced Citigroup.

"The Dow Jones industrial average is famously and hilariously behind the times," says Fortune senior editor at large Adam Lashinsky, author of "Inside Apple: How America's Most Admired -- and Secretive -- Company Really Works." "They've always been late to change."

OK, so tradition is big. Beyond that, the Dow is weighted by stock price, which means high-priced stocks (like one trading above $500) exert an outsize influence on the average and screw everything up, to use the technical term. So, unless Apple's shares hit something more like $50 -- which would require an unlikely 10-for-one split or for the business to implode -- the Dow pickers are likely to resist adding Apple.

Which oddly means the Dow committee might well be in agreement with at least one major valley company: terminally hip and preternaturally unorthodox Apple.

"I think it would cause great consternation at Apple," Lashinsky says of a Dow nod, "because they would be exceedingly normal and institutionalized and fuddy-duddy if they were to be added into something so old school as the Dow Jones industrial average."

Then again, a guy can dream. Right?

Contact Mike Cassidy at mcassidy@mercurynews.com or 408-920-5536. Follow him at Twitter.com/mikecassidy.

How the Dow is calculated

The Dow Jones industrial average is not your average, uh, average. There is math involved: Add the prices of the 30 companies that make up the Dow. And yes, you divide, but not by 30. Instead the Dow uses a divisor that it periodically adjusts. The Dow modifies the divisor, currently 0.132129493, when the list of companies in the index is changed or when the companies within the Dow execute stock splits, mergers, spinoffs or other significant restructuring. Changes in the divisor are designed to eliminate swings in the index that would be caused by extraordinary events.